Bursa reported 4Q12 net profit of RM 35.7m, up 14% YoY, in line with expectations. Operating revenue rose 11% YoY to RM 94.5m. The derivatives segment was the star performer. Looking forward, we are optimistic on the securities market ADT over the next  2-3  months,  as    General  Elections  in  2008  &  2004  led  to  stronger  ADT  in  the quarter  of  the  Polling  Day.  We  maintain  BUY  with  an  upgraded  TP  of  RM7.48  (from RM6.81 previously), which is pegged to 23x 2013 EPS. We ascribe a discount to the historical average of 31x due to the global uncertainties.
 
Derivatives was a star performer, with its operating revenue up 25% YoY, and accounted for  21%  share  of  total  revenue.    Derivatives  daily  average  contracts  surged  25%  YoY  to 43.6k,  due  to  the  48% jump in  FCPO contracts  traded.  The  migration  onto  CME's  Globex Trading Platform (since 2010) has contributed to continued strength in derivatives trading. We are assuming FY13 daily average contracts for derivatives of 50k, up 20% YoY. This is in line with the Company's internal target.

Expect  GE  to  spur  securities  ADT. Securities market recorded ADT of RM 1.51b, which is  a  7%  YoY  improvement.  Market  capitalisation  rose  14%  YoY  to  RM  1,466b,  as  more IPOs were made. Consequently, turnover velocity fell 2 ppt YoY to 25%. Securities market operating  revenue  share  of  total  revenue  remains  the  highest  at  75%.  We  assume  FY13 ADT  of  RM2.0b  which  is stronger  than  FY12's  RM1.6b,  representing  an increase  of 23%. We see the General Election being a contributor to short term ADT strength.

Respectable  dividend  yield.  Bursa  declared a  final  dividend  of  13.5  sen, giving  a FY12 total dividend of 27 sen, representing a payout ratio of 95%. This gives a dividend yield of 4%.

Source: OSK